Moguls erode internet's openness: critic

A decline in innovation is allowing big companies to transform the internet from something open and accessible to something they control, one technology critic says.

"I've seen every change in this business, and I think this one is the most dramatic and maybe most exciting and among the most depressing," said Michael Wolff, founder of Newser.com, while giving a talk at the NextMedia digital media industry conference in Toronto on Monday. "People are taking over and they are successfully taking over."

Wolff elaborated on the ideas laid out in his article "The Web is dead," published in August in Wired magazine, where he is a contributing editor.

He said the web, once a relatively level playing field where even smaller players could participate, is being transformed in to something much more "recognizable" relative to the rest of our world — "a world of moguls."

'But I think ultimately, more open ecosystems tend to win in the longer term.' — Matt Thompson, Mozilla Drumbeat

In an effort to profit from the internet, he added, companies such as Apple, Facebook, Netflix and Twitter are each fighting to monopolize as much of people's time and attention as they can through apps that can only be used with certain devices or platforms and social networks available only to members  — in closed, controlled systems.

"That is essentially what the media business has always done," Wolff added. "The premium in any media business is control."

Wolff said companies' earlier efforts to gain control were stymied by the pace of innovation, giving the example of AOL's demise with the switch from dial-up to broadband internet, and Yahoo's decline after Google created better search algorithms.

"We are in a period of less and less innovation," he added, suggesting that even many shiny new devices like the iPad are simply older technology repackaged. "That's one of the reasons that we're now seeing this change and this great grab of territory."

Openness spurs innovation: Mozilla Drumbeat strategist

Matt Thompson, communications strategist for Mozilla Drumbeat, an organization that seeks to maintain the openness of the web, warned during a panel discussion after Wolff's talk about the potential for closed systems to stifle innovation.

"The personal computer was designed for people to do stuff with it that the inventors of that device had never even dreamed of," he said. "That's what got us the spreadsheet, it's what got us ultimately the World Wide Web."

He noted that Apple's app ecosystem — where iPhone and iPad software must be approved by the company — may have short-term benefits for Apple.

"But I think ultimately, more open ecosystems tend to win in the longer term."

However, Wolff believes companies such as Facebook, Netflix and Apple that have marketing models based on closed systems will dominate both consumer markets and audiences over the next technological generation, although Google will likely remain a player.

Some level of a closed system necessary: Telus

Michael Hennessy, senior vice-president of government and regulatory affairs for telecommunications company Telus Corp., said some level of a closed system is necessary to allow control of rights to media such as movies and music.

"That's where the open web has really failed. It's really too easy to liberate content," he said. "At the end of the day, things people want to consume have to attract money. [Otherwise] you don't have any business."

But he said troubles arise when multiple companies create their own "walled gardens" where certain content is only accessible with certain hardware, as is the case with smartphone apps that must be specifically designed for iPhone, BlackBerry or Android.

"People are going to revolt if they need to spend more and more money on hardware," he said.

Meanwhile, he added, it's also "bad news" for creators of software or other content "because you have to try to create for so many platforms."

'Faux-pen' being used

Richard Kanee, former director of business for CTV Digital, said the companies that ultimately succeed are ones like Netflix that convey a sense of openness to the consumer — something he called "faux-pen."

Netflix streams movies and TV shows to people's TVs. Consumers have to pay for a subscription and the media rights are tightly controlled.

'People are going to revolt if they need to spend more and more money on hardware.' — Michael Hennessy, Telus Corp.

"But they understand the consumer wants control and choice," Kanee said.

Consequently, Netflix has made its service compatible with a range of devices, including game consoles, mobile devices, and some Blu-Ray players and HDTVs.

"As a consumer I have the sense of openness: 'I want it on my iPad — oh, it's there. I want it on my connected TV, oh, it's there.'"

Janis Nixon, marketing director for Universal Island Def Jam music group, said people similarly feel Facebook is open because they access it throughout the day on multiple devices.

Kanee added that kind of openness tends to attract larger audiences than less open systems, which ultimately benefits many companies.

Hennessy warned about a new potential for a closed nature to flourish as companies such as Apple and Bell come to singly control hardware, software, marketing and rights content such as music and movies — things that were traditionally controlled by separate companies.

He  predicted some such companies may eventually face antitrust allegations and regulatory attention.

He also suggested companies that control the networks providing internet access may be increasingly inclined to prioritize specific content such as their own, to the detriment of consumers.